Theory: What game retailers need to do to survive

9 mins read

It’s no secret that games retailers are facing some serious threats in the near future from digital distribution. Slowly but surely, a consumer’s games spend will go into these more convenient and often less expensive shopping experiences, and that will cannibalise into the retailer’s own sales.

Indeed, it’s not just games retailers that face these threats. All kinds of retail, from fashion to food and technology now needs to compete against online shop fronts that can offer cheaper products to the end customer.
But according to the Australian Centre for Retail Studies (ACRS), there are opportunities in those threats. There is a sizable audience out there that can be directed to retail shops from online portals, given the incentive to do so. Retailing is becoming more about the experience, than the point of sale.
Consider Apple stores – actually selling Apple products is the lowest priority of those stores. It’s about having a group of talented sales and technical people on hand to answer questions, show off product demonstrations and provide an exciting place for shoppers to visit. The fact Apple then shifts box loads of products out of those stores is a natural consequence.
So below I outline a couple of things I see games retailers to incredibly poorly in today’s retail environment, and suggest ways that could see them survive into the future, and perhaps even make some business out of digital distribution. 
1) It’s about the shopping experience.
Consider the shops you like to visit. They offer an experience that goes beyond selling you something. For instance, one of my favourite shops, Mag Nation, offers comfortable chairs and late working hours, encouraging people to come in, sit down, and read a magazine. There’s no pressure to buy anything, and no attempt to funnel you through some kind of retail “production line.” The retailer also uses social media to communicate with its customers. And it’s worked. Where traditional newsagents are struggling to sell magazines, Mag Nation is growing.

Retailers need to take a closer look at Apple
I see no attempt for games retailers to encourage people to enjoy shopping there. It’s still row after row of games, tight isles and bargain bins out the front. You’re there not to enjoy games, but to buy them.
There’s a lot that can be done here to improve matters. Make use of the capabilities of the Nintendo 3DS’ StreetPass, for instance. I’ve found myself walking into a game store already, guessing that it’s the most likely place I’ll StreetPass someone, but that wasn’t on the encouragement of the retailer. That same retailer could be using Twitter or Facebook to try and get people in to meet other 3DS owners.
And how about free Wifi? Some games retailers offer it, but no where to use it. No seats, no encouragement to come in and connect online. Many games retailers refused to stock the PSP Go when it launched, under the mistaken belief that it would put them out of business.
Wouldn’t the better idea be to offer free Wifi, a PlayStation Network catalogue, and a comfortable place to sit with your PSPGo (and a power point to charge your console, perhaps?). This would lead to more PlayStation Network card sales, guaranteed. 
2) Educate the staff.
Recently I was in a game store, and overhead a conversation where a salesperson was explaining to a customer that “as long as the game is no longer in print and easy to find in stores, it’s ok to download it for free from the Internet.” I kid you not.

A smart retailer would be able to do serious business with the PSPGo. Instead they refused to sell it at all
The good, smart retailers out there make sure each and every staff member has a proper understanding of the industry they’re working in, and not an education based on what they read on a forum. Being uneducated does not encourage people to come to you for advice, which hurts your retail experience (see above).
And further, games retailer staff needs to be better trained in the art of cross-selling and up-selling. When I bought my 3DS, no one (out of a team of four staff behind the counter) asked me if I wanted any accessories, or even any games. The hardware margin for retailers is nothing compared to accessories.
Margin is also better for used games rather than new ones, yet again, in all my years of buying games I’ve only been asked if I’d rather buy a used copy rather than the higher-priced new game once.
Customers appreciate knowledgeable, articulate staff, who are able to offer additional value without being pushy. Games retailers seem more interested in hiring the first applicant to hand in a resume, and then offering no training before getting them started. 
3) Partner with publishers
Publishers like Activision, EA and Square Enix don’t want to see retailers falling over. Each retailer that disappears removes potential sales for their games, and as such they would be quite willing to work with retailers with smart ideas.

Why can’t we buy the download version of Dissidia 012 in-store?
Individual game codes could be sold for download platforms – rather than buy a $50 PSN card, you could buy a code just for the newest PSN game from Capcom. It wouldn’t even need to take up shelf space – you could have an electronic ticketing system where you’d pick your game from a menu, print out the code, and pay for it there.
There’s no reason that deals couldn’t be done with retailers for special editions, either. Perhaps even offer people who buy the game in-store a day or two head start on its mass release.
Rather than think of ways to get some business out of digital distribution, thought, retailers would prefer to treat it as the enemy, or worse, try and launch their own online shop fronts. Sorry guys, but you’re not going to be able to compete with Steam, let alone the closed stores like PlayStation Network when it comes to selling to consoles.
Games retailing, to survive, needs to undergo a fundamental shift in attitude and approach. At some stage, it will click with one or two retailers – perhaps independent, perhaps a chain or franchise. Those are the ones that will still be left 10 years from now.

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